Strategic Management Journal Part 4

Strategic Management Research Journal Part 4

Strategic Management Research Journal Part 4

Caterpillar Inc is the world’s top manufacturer of construction and mining equipment, diesel, natural gases, industrial gas turbines, and diesel-electric locomotives. The company has been driving sustainable progress and helping customers build a better world through innovative products and services (Caterpillar, 2020). Since 1925, the company has been connecting people to food, water, energy, work, and one another.

Long-term goals

According to Caterpillar Inc (2020), the firm intends to design all-new facility construction to meet Leadership in Energy and Environmental Design (LEED) or comparable green building criteria in the long term. The company also intends to leverage its technology and innovation to improve its products, services, and solutions for customers. Additionally, the firm wishes to provide leadership in the safety of people in, on, and around their products.

Short-term goals

The company will be able to meet its long-term goals if it can strategically sustain its short-term goals. The company’s short-term goals include reducing energy intensity and greenhouse emissions by 50%, reducing water consumption and by-product materials intensity by 50% (Caterpillar, 2020). The firm also aims at using alternative or renewable sources to meet 20% percent of its energy needs. Further, the company intends to reduce employee injury rate and time lost due to injury to 0.

Contribution of mergers and acquisitions

A merger occurs when two or more companies blend to form an entirely new company. An acquisition, however, occurs when a company takes over another. Mergers and acquisitions are crucial since they raise a company’s competitive edge over competitors. Caterpillar Inc has always been strategic in acquiring acquisitions and mergers to boost its products. In the last 3-5 years, Caterpillar Inc has had two acquisitions, one in 2017 with Yard Club and another in 2016 with Kemper Valve & Fittings Corp. Yard Club develops cohesive web and mobile apps for construction experts to enhance and manage their owned and rented gears. Kemper Valve & Fittings Corp is involved in assembling, providing, and retailing pressure pipe combinations.

Acquisitions and mergers have enabled Caterpillar Inc to expand and succeed in the global market. Becoming global has contributed to the company making more profit and relieve difficulties in the worldwide market. For example, the acquisition with Yard Club contributed to merging web and mobile apps, consequently increasing Caterpillar machines and equipment efficiency.

Caterpillar’s most critical acquisition

Caterpillar has acquired a total of 36 companies. However, its greatest and most strategic one happened in 2010 with the acquisition of Bucyrus for $7.6B (Constantino, 2011). The acquisition led to significant benefits that either of the companies could not have achieved on their own. The benefits accrued include; CAT gained more sales of new equipment and after-market parts and support. Further, the company got lower cost of products with higher reliability achieved by using Caterpillar engines and components of Bucyrus products. Additionally, through the company’s global manufacturing, supply chain, and purchasing capabilities, the company achieved improved service and operating costs.

Effectiveness of Caterpillar’s operational plan 

Since Caterpillar operates globally, the foreign direct investments of the company in different countries increase the company’s global presence. CAT’s operational excellence has resulted in disciplined management of the structural costs. According to Caterpillar Inc (2020), the company managed its costs and successfully went into a pandemic with a strong financial position. The company’s multi-country strategy attempts to build the brand name in different foreign markets. The multi-country strategy is meant to address the needs of all customers globally (Thomson, 2018). Through its operational plan, CAT strives to improve its presence in foreign markets and is committed to providing quality products to maintain its high competitive edge. High-quality products improve a company’s brand name and create loyalty among members.

References

Caterpillar. (2020). Caterpillar Inc Annual Report.

https://www.caterpillar.com/en/investors/reports.html

Constantino, D. (2011). Acquisition-Done deal… and a big one at that. Caterpillar completes its   acquisition of mining equipment giant Bucyrus, with results that will affect the aggregates industry. Pit and Quarry, 104(3).

Thomson, A. (2018). Caterpillar Inc. Vision, Mission, Intensive Strategy, Five Forces,      SWOT. Panmore Institute

Caterpillar Inc. Mission, Vision, Growth Strategies, Five Forces, SWOT